Three Ways to Start Building Good Credit

A good credit history will help you qualify for more credit cards, mortgages and loans, and receive the best rates on interest and fees. Fortunately, there are simple things you can do to start building a positive credit history whether you are just starting out or trying to rebuild a credit score.

Open a Checking and a Savings Account

Most lenders see active checking and savings accounts as a sign of financial stability, according to MSN. In fact, you will be asked if you have an open bank account on most credit applications including credit cards, loans and retail store cards. You can open an account at any local bank. You will need some basic information about your identity, such as Social Security number, address and employment information, and a small deposit to open each account. Most basic checking accounts come with a monthly maintenance fee, but many banks will waive the fee if you set up direct deposit with your employer or make a certain number of debit card transactions each month.

Open a Credit Card Account

Opening a credit card account will add to your available credit limits, your payment history and your debt ratio, all of which can help you build a positive credit history. Many credit companies have credit cards designed for people with a limited credit history. However, be sure to read the fine print on any credit card before you sign up. Some credit cards can carry high annual fees, interest rates and maintenance fees. If you are having trouble qualifying for a regular credit card, consider a secured card. With a secured credit card, you pay a deposit and the company issues you a credit card with a credit limit equal to your deposit. After several months, you can switch to a regular card.

Maintain Your Credit Card Account

Keeping your recurring balances low and paying your bill on time every month will go a long way toward building a good credit history. When you use your card, plan to pay it off in full every month or only carry a small balance. A large debt has a negative impact on your credit score. According to MSN, you should carry less then 30 percent of your total credit limit. Be sure to pay at least the minimum payment by the due date each month. Your payment history has a large impact on your credit score and even one late payment can lower your credit score.